Deals with a MGFV
have lower monthly repayments because they only cover part of the purchase price.
CAR PURCHASE LOANS offered by the big banks are tailored to MGFVs
, allowing you to defer a percentage of the loan - a "balloon payment" - until the end of the term.
The MGFV is deducted from the price and you pay the remainder in instalments.
At the end, you can either pay the MGFV and take the car away, throw back the keys and walk away, or trade it in as part payment for a new model.
You then pay a deposit, typically a third of the value, and the monthly repayments are worked out by taking the deposit and MGFV
from the price.
If you don't know a PCP from an APR, or can't tell your HP from your MGFV
, you are not alone.
The buyer has to pay the remaining amount, which is the difference between the list price and the MGFV, in instalments.
After two or three years the buyer can keep the car by handing over the MGFV.
You have to pay the remaining amount, the difference between the list price and the MGFV
, in instalments.